Question

When there are lower prices, but waiting lines customers will often be drawn to the competing location of a Monopolistic Competitor with greater customer service and better atmosphere. true or false?

Answer 1

The key characteristics of a Monopolistic Competition is that, that though, there is no formal regulation on the entry and exit of the firms that try to earn profits, the fact that promotes higher profits is that some companies offer products and services which are different from the later.

The fact here, that product differentiation is equally important in setting the tone for monopolistic competition is very important to be seen.

In the case above, if there are two competing firms, then in that case it is not valid to say that all customers will prefer to go and purchase the product which is sold at a cheaper rate.

They can also, turn to those who offer better services and overall experience. Therefore the statement that the customers can turn to those competitors offering greater customer service and a better atmosphere is True.

The biggest example of this case study are restaurants to which people turn to even if there is lower prices in the other counterparts. People tend to prefer high end restaurants that allow for value for money in terms of the customer services offered and they become monopolistic with the product differentiation which they thus offer.

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